geschäftsbericht annual report 2006...this annual report contains the annual accounts of the arg...

2006Geschäftsbericht2006

2006Annual Report2006

Annual Report 2006

Inhalt00Contents

Annual Report 2006

4

01 Editorial by the Managing Directors 6

02 Shareholder Structure 8

03 Supervisory Board 10

04 Group Advisory Board 12

05 The ARC Group 14

Corporate Structure 17

06 Management Report 18

Business Development 2006 19

Scope of consolidation, earnings position, existing projects and work in the pipeline,

research funding, cost structure, net result for the period, investments, cash and financial positions,

outlook and personnel 21

07 Financial Statements 28

Consolidated Balance Sheet 30

Consolidated Profit and Loss Account 32

08 Imprint / Contact Details 35

5Annual Report 2006 �

Contents

Chapter Page

01Editorial by theManaging Directors

Annual Report 2006

6

This annual report contains the annual accounts of the ARG Group for the

year 2006. Yet, rather than being a retrospective document evaluating

previous financial performance, in many ways it is far more the starting

point for a strategic and commercial realignment of Austria’s largest non-

university research institute. We are also simultaneously publishing ARC’s

Intellectual Capital Report 2006. Both, the scientific and the commercial

reports, make clear that the scientific excellence of Austrian Research

Centers is and remains undisputed, and that ARC enjoys considerable

international recognition. The strategic and commercial re-alignment of

the Group has already begun and this comprehensive process of renewal

is firmly on track.

The year under review also witnessed a change in the management of ARC: on 26 April, Hans Rinnhofer was appointed as

Managing Director for Strategy and Finance, officially succeeding Helmut Krünes on 1 October. Hans Rinnhofer and Prof. Erich

Gomik now form the Board of Management of ARC.

In order to better manage the new challenges faced by the Group, we, the new management team, have elected to simplify and

optimise the corporate structure of Austrian Research Centers. The previously complex hierarchical organisation has been made

leaner through a process of reorganisation and integration to form a one-company structure. Furthermore, four new strategic

divisions have been created: Health Technologies, Materials Technologies, Information Technologies and Mobility & Energy.

ARC’s research activities in all of its strategic divisions are now aligned so as to be application-oriented and commercially

exploitable. The organisational restructuring of the Group will make it even easier and more efficient for us to directly offer our

customers and clients research and innovation services. As such, 2006 was a year in which a clear decision was made to

enhance our performance-based orientation as a basis for future commercial successes.

On behalf of Austrian Research Centers, we would like to take this opportunity to express our appreciation to the Federal

Ministry for Transport, Innovation and Technology, as 51% shareholder representative, for its support. Our thanks also go to the

remaining 49% of shareholders from the industrial sector for their cooperation which extends far beyond merely commercial

partnerships. We would particularly like to highlight the decisive role in our past and future successes played by our employees,

to thank them and to express our recognition of their efforts.

We are in a position to view the current business year and its challenges with confidence and as a firm basis upon which the

Austrian Research Centers facilities in Seibersdorf, Vienna, Leoben and all the other locations can underline the Group’s status

as the flagship of non-university research in Austria.

Hans Rinnhofer Prof. Erich Gornik

General Directors Austrian Research Centers GmbH – ARC


Editorial

02Shareholders

Annual Report 2006

8

A Republic of Austria (50.46 %)

� BMVIT Federal Ministry for Transport, Innovation and

Technology

B Industry (49.54%)

� ALCATEL AUSTRIA Aktiengesellschaft

� ALLIANZ ELEMENTAR Versicherungs-Aktiengesellschaft

� APC Advanced Pollution Control AG

� ABB AG (prev. ASEA BROWN BOVERY Aktiengesellschaft)

� AUSTRIA METALL Aktiengesellschaft

� BANK AUSTRIA CREDITANSTALT AG

� BAWAG - Bank für Arbeit und Wirtschaft Aktiengesellschaft

BERNDORF Aktiengesellschaft

� BÖHLER-UDDEHOLM Aktiengesellschaft

� BSM Diagnostica Ges.m.b.H.

� BZA Liegenschaftsverwaltungs GmbH

� ENERGIE OBERÖSTERREICH Aktiengesellschaft

� ENNSKRAFTWERKE Aktiengesellschaft

� ERSTE BANK der österreichischen Sparkassen AG

� EVN Energie-Versorgung Niederösterreich AG

� F. Joh. KWIZDA Unternehmens-

verwaltungsgesellschaft m.b.H.

� GEROT PHARMAZEUTIKA Gesellschaft m.b.H.

� GrECo International Aktiengesellschaft, Insurance Broker

� HENKEL CENTRAL EASTERN EUROPE

� HIRTENBERGER Aktiengesellschaft

� INVESTKREDITBANKAG

� KELAG-Kärntner Elektrizitäts-Aktiengesellschaft

� KOMMUNIKATIONS- & SICHERHEITSSYSSTEME

Ges.m.b.H.

� LAFARGE PERLMOSER AG

� MAGNA STEYR Fahrzeugtechnik AG & Co KG

� MEDISCAN GmbH

� OMV Aktiengesellschaft

� ÖSTERREICHISCHE ELEKTRIZITÄTS-WIRTSCHAFTS-

Aktiengesellschaft

� PKE Electronics AG

� PLANSEE Aktiengesellschaft

� SIEMENS Aktiengesellschaft Österreich

� SIEMENS Building Technologies GmbH & Co. OHG,

Building Autom./HVAC Products

� STEWEAG - Steirische Wasserkraft- und Elektrizitäts AG

� TELEKOM AUSTRIA AG

� TELE-RING Telekom Service GmbH

� VA TECH HYDRO GmbH & Co

� VA TECH WABAG GmbH

� VA TECHNOLOGIE Aktiengesellschaft

� VERBAND DER ELEKTRIZITÄTSUNTERNEHMEN

ÖSTERREICHS

� VERBUND -Austrian Hydro Power Aktiengesellschaft

� VEREINIGUNG DER ÖSTERREICHISCHEN INDUSTRIE

(Industrial Association)

� VOEST-ALPINE INDUSTRIEANLAGENBAU

Ges.m.b.H. & Co KG

� VOEST-ALPINE STAHL Gesellschaft m.b.H.

� VORARLBERGER ILLWERKE Aktiengesellschaft

� WAAGNER-BIRO BINDER Aktiengesellschaft

� WIENSTROM GmbH


Shareholder Structure

03Supervisory Board

Annual Report 2006

10

Chairman

Rainer WIELTSCH

Deputy Chairmen

Andreas REICHHARDT from 26.04.2006 (previously a member of the Supervisory Board)Mathias REICHHOLD until 31.07.2006Ingolf SCHÄDLER until 26.04.2006 (since a member of the Supervisory Board)Karl SCHWAHA, PhD. from 13.09.2006 (previously a member of the Supervisory Board)

Members of the Supervisory Board

Prof. Günther BONNDieter DERNTLPeter EGGER, PhD. from 31.07.2006Rudolf FISCHER until 18.12.2006Silvia JANIK, PhD.Peter LAYR, PhD.Ingolf SCHÄDLERHans SCHÖNEGGERPeter SCHWAB, PhD.Johannes STROHMAYER, PhD.Franz VIEHBÖCK from 18.12.2006

Members of the Supervisory Board appointed by the workforce

Andrea ALBRECHTKarl Heinz ASCHBACHERPhilip LEOPOLDKarl FARTHOFERHeinrich HUMERRudolf ORTHOFER, PhD.Eva WILHELM, PhD.

11

Members of the Supervisory BoardAs at 31.12.2006

Annual Report 2006 �

04Group AdvisoryBoard

Annual Report 2006

12

Ingeborg Hochmair-Desoyer,Born in Vienna in 1953, Ingeborg Hochmair-

Desoyer studied electrical engineering at

Vienna University of Technology and in

Karlsruhe. After working as an assistant

lecturer at the Institute of Electrical

Engineering and Electronics at Vienna

University of Technology, in 1986 she

moved to the Institute of Applied Physics in

Innsbruck. In 1995, as managing director of

the Innsbruck company Med-El GmbH, she

was elected V.C. Business Woman of the

Year.

Hermann Kopetz, (Chairman of the Advisory Board) Hermann

Kopetz, born in Vienna in 1943, studied

physics and mathematics at the University

of Vienna, obtaining his doctorate in 1968

sub auspiciis praesidentis. After a spell as

assistant professor at the University of

Georgia, he worked for VOEST ALPINE in

Linz for eight years. In 1982 Hermann

Kopetz was appointed professor at Vienna

University of Technology‘s faculty of soft-

ware engineering and real-time systems,

and currently heads the Institute of

Computer Engineering. Hermann Kopetz is

the German-speaking world‘s foremost ex-

pert in the field of embedded systems.

Haim Harari, Born in Jerusalem in 1940, Haim Harari,

studied physics at the Hebrew University in

his home town. He has been employed at

the Weizmann Institute since 1966, where

he was appointed professor of high energy

physics in 1970. He was president of the

Weizmann Institute of Science from 1988

through 2001. Today, Haim Harari is chair-

man of the board of the Davidson Institute

for Science Education.

Heinrich Rohrer, Born in St. Gallen in 1933, Heinrich Rohrer

studied physics at the Swiss Federal

Institute of Technology in Zurich, obtaining

his doctorate in 1960. From 1963 through

1997 he worked at the IBM research labo-

ratory in Rüschlikon in Switzerland. In

1974/75 he spent a sabbatical at the

University of California in Santa Barbara.

Together with Gerd Binnig, in 1986 Heinrich

Rohrer was awarded the Nobel Prize in

Physics for the development of the scan-

ning tunnelling microscope.

Bert Sakmann, Born in Stuttgart in 1942, Bert Sakmann

studied medicine, obtaining his doctorate

from the University of Göttingen in 1974.

He habilitated at the University of Göttingen

and carried out research in biophysical

chemistry at the Max Planck Institute. Bert

Sakmann has been Director of the

Department of Cellular Physiology at the

Max Planck Institute for Medical Research

in Heidelberg since 1989. In 1991, the cel-

lular physiologist was awarded the Nobel

Prize in Medicine together with Erwin

Neher.

Siegfried Selberherr, Born in Klosterneuburg in 1955, Siegfried

Selberherr studied electrical engineering at

Vienna University of Technology, obtaining

his doctorate in 1981. In 1988, he was

appointed professor of software engineer-

ing for microelectronic systems at Vienna

University of Technology. From 1998

through 2003, Siegfried Selberherr was

Dean of the Faculty of Electrical

Engineering, and, from 2004 through April

2005, Dean of the Faculty of Electrical

Engineering and Information Technology at

Vienna University of Technology.

Horst Schmidt-Bischoffshausen,Born in Vienna in 1940, Horst Schmidt-

Bischoffshausen studied physics at Vienna

University. In 1971, he moved from

Research Centre Jülich into industry, where

he subsequently worked in research and

technology development for Daimler

Chrysler AG. In the year 2000, he was

appointed Head of Strategic Development,

Patent Applications and External Relations

at the Corporate Research Center in

Germany.

Walter J. Ammann, Born in 1949, Walter J. Ammann studied

construction engineering at the Swiss

Federal Institute of Technology in Zurich

and obtained a doctorate in structural

dynamics. He has headed up the Swiss

Federal Institute for Snow and Avalanche

Research in Davos since 1992, became

head of natural dangers research at the

Swiss Federal Institute for Forest, Snow

and Landscape Research in Birmendorf in

1994, and was appointed to the establish-

ment‘s board of directors in 1999. Walter

Ammann also teaches at the Swiss Federal

Institute of Technology in Zurich.

Günter Hertel, Günter Hertel studied transport engineering

and mathematics at the “Friedrich List”

University of Transportation in Dresden,

obtaining his doctorate in 1974. In 1992, he

was appointed professor of the transporta-

tion systems faculty at Dresden Technical

University. In 1996, he was selected to

head one of the four research & technology

boards at the Daimler-Benz Group, and is

today Vice President for Research and

Technology.


Group Advisory Board of Austrian Research Centers

05The ARC Group

Annual Report 2006

14

Austrian Research Centers (ARC) is Austria’s leading research and technology establishment and a key playeron the European research landscape where the exchangeof knowledge with universities and companies is central tothe successful development of industry. ARC conducts research to underpin the competitiveness of Austria in aninternational context. A total of around 1,200 employeeslocated at 14 sites across Austria, with the main facilitiesin Seibersdorf, Lower Austria, and in Vienna, act as tech-nology providers and innovation partners to society, industryand commerce.

Technology provider and innovation partner

Applied research is an essential element of every healthyeconomy. Only through a determination to constantly in-vest in innovations can a company differentiate itself fromits competitors and succeed in international markets.Large and internationally recognised research establish-ments such as ARC play a vital part in assisting compa-nies in the search for and in the implementation of newtechnological developments. The institutionalised techno-logy transfer services provided by ARC are critical to thesuccessful transfer of know-how and do-how, and they also take account of the interests of SMEs. ARC realisesfuture-shaping solutions through its role as an interfacebetween research-based and commercial companies.

Operating performance of over e 100 million

Of the Group’s overall operating performance, which exceeds e 100m per year, around 60% is generated byprojects awarded by industry partners and through com-petitive sources of research funding (e.g. EU), with approximately 40% coming from regular state financing ofindependent research. The independent research servesto open up new areas of knowledge and new applicationsand, as such, is the basis for future-oriented services forsociety and industry provided by Austrian ResearchCenters.

Outstanding employees

The ARC Group can draw on the resources of nearly1,000 permanently employed personnel to meet theneeds of Austrian industry. The number of researchers enjoying fixed contracts of employment rose during theperiod under review to 520, while the number of youngscientists completing diplomas or doctoral theses withinthe ARC Group increased to 270. As a result of the strongties with their supervisors, these rising stars of the scientificscene will be ARC’s future partners even if they ultimatelywork in a non-research field. The same is also true of the many international scientistsand trainees who, in additional to their scientific work, alsobring linguistic and cultural diversity to Austrian ResearchCenters.


Austrian Research Centers

Four strategic divisions

ARC reinforces the technological knowledge base of theAustrian economy by achieving scientific and technologi-cal excellence and by means of international research co-operations. These in turn boost the competitiveness ofAustrian companies in international markets through theuse of new technologies and knowledge derived from theGroup’s research work. ARC uses its knowledge acquiredas a partner to industry in the formulation of Austria’s tech-nology policy.

Austrian Research Centers is organised into four strategicdivisions which reflect the company’s main research foci.

� Health Technologies� Materials Technologies� Information Technologies� Mobility & Energy

There are two additional multi-disciplinary divisions

� Nano-System Technologies� Systems Research

Ten thematic research and technology programmes

The independent research undertaken by AustrianResearch Centers is organised into ten subject-based research and technology programmes.

Ten areas of innovation� Intelligent Systems� Nano-System Technologies� Life Sciences� Biogenetics� Materials Research� Health Physics� Biomedical Research� Mobility� Energy� Systems Research

The importance of independent research should not beunderestimated. It is a long-term activity that generatesthe knowledge for future application-based projects which,in turn, provide the basis for later contract research projects from industry.

Innovative strength

The ability to generate innovations is one key indicator ofapplication-oriented research. And publications in scientificjournals and the proceedings of international conferencesare a key indicator of the scientific quality of research. ARC has continuously increased the number ofsuch publications in recent years. The numbers of patentapplications and patents awarded – the foremost prereq-uisite for innovations – have also increased, allowing ARCto be benchmarked favourably against other European research institutes. For further details please refer to theIntellectual Capital Report 2006.

EU research and technology programmes

A further indication of ARC’s international competitivenesscan be seen in the Group’s intensive involvement in theresearch and technology programmes of the EuropeanCommission, a context in which Austrian ResearchCenters cooperates with other European research insti-tutes and companies to establish new partnerships. Thisis an important means of exchanging application-orientedscientific findings with other players.

Innovations from independent research funding

While research funding used to be distributed evenlyamong the various fields of scientific research, todaythese funds are allocated on a competitive basis. This hasthe effect of providing additional financing for independentresearch to business units that can prove their future potential.

16 � Annual Report 2006

05Austrian Research Centers


Organisational Structure

As at 31.12.2006

06Management Report

Annual Report 2006

18

Business development of Austrian Research Centers GmbH in 2006

Since 1 October 2006, the Board of Management hasbeen made up of Hans Rinnhofer (responsible forCorporate Strategy and Finance, and Spokesman of theBoard of Management) and Prof. Erich Gornik (respon-sible for RTD Strategy, Research, Technology andDevelopment). The previous managing director, HelmutKrünes, left the Group with effect from 30 September2006.

New organisational structureIn mid-2006, the ARC Group was comprehensively restructured on the basis of thematic research areas. Thenew corporate structure essentially removed an entire layer of management. It also entailed the establishment ofan extended Board of Management that is key to effective andtransparent communication and decision-making systems.The four strategic divisions, Health Technologies,Materials Technologies, Information Technologies andMobility & Energy, encompass the Group’s research foci.In addition, there are also two multi-disciplinary divisions,Nano-System Technologies and Systems Research. A divisional manager has been appointed to head up eachof the new strategic divisions: Georg Haberhauer, for Health Technologies; HelmutKaufmann for Materials Technologies; Heinrich Garn forInformation Technologies; and Anton Plimon for Mobility &Energy. Peter Euringer joined the Group on 1 October2006 to lead the Finance Department.

Intra-group mergers - flexible organisational structureThe complex group structure, with a holding company,various operating companies and a management com-pany, that was in place in early 2006 has been simplifiedand optimised. During the course of the restructuringprocess, three subsidiaries, ARC Seibersdorf researchGmbH, ARC systems research GmbH and ARC businessservices GmbH were retroactively merged upstream intothe ARC holding company in November 2006 with effectfrom 31.12.2005. The companies ÖsterreichischesForschungs- und Prüfzentrum Arsenal Gesellschaft mbH,Nuclear Engineering Seibersdorf GmbH and ISS-Innovative Software Services GmbH (now renamedInnovative Science Solutions BeteiligungsgesellschaftmbH) and ARCINA L.L.C., as well as the competencecentres ARC Leichtmetallkompetenzzentrum RanshofenGmbH, ECHEM Kompetenzzentrum für AngewandteElektrochemie GmbH and Advanced Computer VisionGmbH - ACV, remain subsidiaries or affiliated companiesrespectively.

Positive appraisal by Group Advisory BoardThe report issued by ARC’s Group Advisory Board inNovember 2006 included a positive assessment of thenew corporate structure. As in the previous period, theBoard of Management was advised to continue focussingits strategic profile in terms of research activities. The recommendation was also made to forge ahead with thisrefocusing process within each of the newly formed strategicdivisions.


Management Report

Disposal of FWGThe Group disposed of one of its subsidiaries, theEisenstadt-based Funktionswerkstoffe Forschungs- undEntwicklungs GmbH., in November 2006.

Site optimisationThe group management and administration departmentswere streamlined and relocated from the Vienna Techgatesite to the Group’s main facility in Seibersdorf in October2006.

The following steps were taken during the site optimisa-tion process in November 2006 for a variety of efficiencyand cost reasons:

� Relocation of the Medical Technology Department fromWiener Neustadt to Vienna (Techgate facility)

� Relocation of Advanced Computer Vision GmbH - ACVfrom separate rented premises to Vienna /Techgate

� Closing of the city office of Austrian Research CentersGmbH - ARC in Vienna’s First District.

Rapid reaction to serious cash positionDuring 2006, the Group’s finances failed to develop in linewith expectations. In July, the Group was faced with possiblecash shortages at the end of the year.

Various steps were undertaken in order to rectify the situa-tion. These included, for example, a cost-cutting pro-gramme for current expenditure and investments as wellas an active working capital management policy, particu-larly with respect to accounts receivable. In addition, efforts were made to accelerate the throughput of, and therevenues generated from, existing projects, while at thesame time actively extending accounts payable. Thesemeasures enabled the Group to avoid a negative cash position on the balance sheet date.

Tight budgetBudgetary planning for 2007 is based on the level of basicfunding for current research activities from the FederalMinistry for Transport, Innovation and Technology remain-ing essentially unchanged; accompanied by a slight increase in revenues from contract research activities andpublicly financed projects won by competitive tender.Further cost savings and optimisation measures are alsoon the agenda.


06Management Report

Scope of consolidation

All of the subsidiaries legally controlled by AustrianResearch Centers GmbH - ARC, with the exception ofARCINA (see below), were included in the scope of consolidation. Capital consolidation was based on thebook value method.

In accordance with Section 249, Sub-section 2 of theAustrian Commercial Code (UGB), the following subsidiary was not consolidated on the grounds of immateriality with respect to any impact on the Group’sasset, financial or earnings positions:

Name and registered offices of the company InterestÖsterreichisches Forschungs- und Prüfzentrum Arsenal GmbH Vienna 100%ARC Leichtmetallkompetenzzentrum Ranshofen GmbH Ranshofen 100%ISS-Innovative Software Services GmbH (now renamed Innovative Science Solutions Beteiligungsgesellschaft) Vienna 100%Nuclear Engineering Seibersdorf GmbH Vienna 100%ECHEM Kompetenzzentrum für angewandte Elektrochemie GmbH Wiener Neustadt 88%Advanced Computer Vision GmbH – ACV Vienna 87%

ARCINA L.L.C. State College, US 100%


Earnings position

The growth seen in previous periods continued unabatedduring 2006. The rise in revenues from contract researchactivities of 8% (excluding changes in inventory) is indica-tive of the market demand for the research and develop-ment services provided by Austrian Research Centers.

In terms of publicly funded research, there was a markeddecline of 16% (excluding changes in inventory) whichwas more than compensated by research promotiongrants provided by the federal fund for research, innova-tion and technology programmes Vision System on Chip,Light Weight Multi-Materials Structures and AppliedBioinformatics and Proteomics.

The position in the table below relating to other own workcapitalised and other operating income includes own workcapitalised in the amount of Te24 (prior year: Te1,533) inaddition to other operating income in the amount ofTe3,545 (prior year: Te8,888). The sharp decline in thisposition (-66%) is largely attributable to the reversal in2005 of contingent liabilities relating to the lack of riskspreviously associated with the former arsenal research facility, and due to a drop in income from the reversal ofprovisions.The rise in the position “Income from BMVIT – independentresearch” of 5% is accounted for by the late lifting of the5% working capital requirement applicable to the financialyear 2005 which it was first possible to recognise in the financial statements for 2006.


06Management Report

% changeConsolidated P&L in Tg 2006 2005 2005 : 2006

R&D revenues inc. changes in inventory 41,894 39,094 7% R&D funding inc. changes in inventory 16,861 21,098 -20%

1. Total revenues from research projects 58,755 60,192 -2% 2. Funding from federal RTD fund 9,990 0 100%

Income from BMVIT – independent research 39,800 37,996 5% Income from syndicate agreement 1,180 1,087 9%

3. Total research income from shareholders 40,980 39,083 4% Nuclear BMVIT 4,877 4,790 2% Nuclear BMfLFUW 62 166 -63%

4. Total nuclear research funding 4,939 4,956 0%5. Own work capitalised 24 1,533 -98% 6. Other operating income and own work capitalised 3,545 8,887 -66%

Total of other operating income 118,233 114,651 3%

Value of new projects, existing projectsand work in progress

New projects securedIn the course of 2006, ARC secured contract research andpublicly funded research projects valued at e54.6 million.

Value of existing projectsExisting projects valued at e77.78 million (prior year:e69.98m) mean that the ARC Group’s capacity is wellutilised in the short and mid terms.

Projects in the pipeline (not yet completed)The value of unfilled project orders amounted to e55.91mon the balance sheet date (prior year: e43.82m). This figure was made up of e17.60m (PY: e16.89m) in contractresearch projects, e32.30m (PY: e23.01m) in publicly financed projects, and e6.01m (PY: e3.92m) in Kplus centre subsidies.


Research grants

In addition to its contract research activities, researchgrants make up the majority of the Group’s operating per-formance and finance its exploratory research activities.Amounting to e50.97m (PY: e39.08m) of total operatingincome in the amount of e118.23m (PY: e114.65m), thissource of financing accounts for around 43% of all operat-ing revenues (PY: 35%). In addition to meeting the greaterneed to co-finance research promotion programmes,these resources made it possible to further bolster our areas of excellence and thereby the technological com-petence of the entire group.

Cost structure

Personnel costs as a percentage of operating perform-ance in 2006 amounted to 58%, or 4% more than in theprevious period. This increase includes one-off additionalexpenses associated with the restructuring process.Expenses for contracted services amounted to 20%, 1%less than in 2005. The cost of materials totalled 6% of operating performance, also 1% less than in the previousperiod. Depreciation and amortisation remained essentiallyunchanged at 6%, as indeed was the case with other expenses, which remained at 18%.


06Management Report

Consolidated result in Tg 2006 2005Profit/loss for the year of subsidiaries -6,074 874Consolidation effects:

a) Consolidation of restructuring costs 3,170 0 b) Minority interests 13 -15 c) Reversal of extraordinary items (consolidation of arsenal) 0 1,561 d) Financing Technology Offensive from capital reserves -1,119 -1,212

Total consolidation effects 2,065 334 Consolidated result for the period -4,010 1,208

Annual result

Consolidated losses for the period amounted to e-4.01m(following profits of e1.21m in the prior period) and can bebroken down as follows:

Capital investments

In addition to the need to make infrastructural improve-ments at the various facilities, the efforts to consolidateand increase research competitiveness required addition-al investments in technical and knowledge-based plantand equipment.

It was only partially possible to implement the investmentstrategy which foresaw not only an upgrading of technicalR&D infrastructure to meet modern requirements, but alsoa demand-oriented increase in the investment ratio andthe renovation of the Seibersdorf facility. The upgrading ofthe infrastructure at the Seibersdorf site in particular willremain a priority for the ARC Group in 2007 and beyond.

Investments in tangible and intangible assets

The overall volume of investments in tangible and intangi-ble assets during 2006 amounted to e11.31m (PY:e13.67m). A total of e0.40m (PY: e0.54m) was invested inintangible assets (mainly software and the like). Additionsto the position “Land and buildings” amounted to e3.94m(PY: e1.30m), while a further e5.55m (PY: e9.67m) was invested in technical equipment. Investments in fixturesand fittings involved a further e0.88m (PY: e 1.70m).There were no investments in financial assets during 2006(PY: e0.02m).


Cash and financial positions

The cash position of the ARC Group declined markedlyduring the year under review as it had in the earlier period.Cash and cash equivalents at 31.12.2006 stood ate12.49m (PY: e20.99m). Share accounts with balancestotalling e9.91m are also recognised (PY: e9.99m). TheGroup has no liabilities due to banks and only interestcharges of e0.77m (PY: e0.49m) are carried in connectionwith FFG loans.

With regard to the value of cash and cash equivalents ofe12.49 million on the balance sheet date, it should be notedthat this figure also includes EU coordination funds in theamount of e4.11m. These funds are kept in trusteeshipand may not be drawn upon by the ARC Group to makepayments. The Group’s financial means are further limitedby the projects to be delivered during 2007 for which pre-payments of e3.38m have been received, in addition to anoutstanding repayable pension contribution in the amountof e1.22m and receipts of research funds for as yet unde-livered projects totalling e3.32m.

Cash outflows during the 2006 financial year amounted toe8.49m, essentially unchanged in a year-on-year compar-ison (PY: e8.48m). These payments were mainly associatedwith the technology offensive and the settlement of otheroutstanding liabilities.

Largely as a result of the accumulated loss for 2006(e6.04m), at 31.12.2006 the Group recognised equity cap-ital in the amount of e40.63m (PY: e44.76m), equivalent toan equity ratio of 40.4% (PY: 42.6%).

Outlook

In 2004, the decision was taken to embark on a compre-hensive technology offensive programme to bolster theGroup’s knowledge base and increase its competitivenessin the period 2004 to 2008. This programme was financedusing the Group’s own funds, in the amount of e39.35m, inaddition to grants from a special federal RTD fund(Nationalstiftung) totalling e16.5m.

The revenue and expense forecasts for the 2007 predictthat the current period will finish with a positive result. Thebudgetary planning for 2007 has been calculated on thebasis of unchanged basic funding from the BMVIT min-istry for on-going research operations, and on a marginalincrease in revenues from contract research projects andsubsidised research projects secured through competitivetendering procedures.

The ARC Group will continue during 2007 to tap latentsynergy potentials and to forge ahead with the commer-cial exploitation and targeted intensification of the technol-ogy offensive, and shall apply appropriate risk and cashmanagement strategies in doing so. In order to ensuresustainable growth and profitability, Austrian ResearchCenters will focus on strengths and opportunities whichalign closely with the existing range of services offered.

The introduction of an integrated planning and controllingsystem, accompanied by appropriate process and organi-sational adaptations, and combined with the use of future-oriented key performance indicators will improve the direction of the Group and enable adverse developmentsto be recognised at an earlier stage. Additional controllingis also expected to provide up-to-date assistance in decision-making processes.


06Management Report

Personnel

The ARC Group employed at total of 933.8 employees(full time equivalents) at nine sites in Austria on the balance sheet date of 31.12.2006. This represents a marginal increase of 0.2 FTEs compared with the end ofthe previous period (933.6 FTEs).The upward trend in the first half of the period under review, which culminated in a workforce of 974.2 FTEs inJune 2006, was reversed in the second half which saw areduction of 40.4 FTEs.

*) The upstream mergers of ARC Seibersdorf research

GmbH, ARC systems research GmbH and ARC business

services GmbH, as subsidiaries, with the parent company

Austrian Research Centers GmbH – ARC, with effect from

31.12.2005, became legally effective following the appropria-

te entries in the Austrian Register of Companies in November

2006. It should be noted that, as a result of these mergers,

any comparisons of the personnel levels reported in the

above table for 2006 with those for 2005 are only partially

valid.


Personnel level development (full-time equivalents) 31.12.2006 31.12.2005ARC *) 618.8 12.5 Nuclear Engineering 43.8 43.6 business services *) - 71.6 seibersdorf research *) - 493.8 systems research *) - 42.7 arsenal research 182.7 172.9 ACV 22.4 26.9 ECHEM 27.3 26.3 LKR 38.8 43.3 Innovative Software Services 0.0 0.0

ARC Group at 31.12., FTE total 933.8 933.6ARC Group at 31.12., headcount 992 988ARC Group - annual average number of FTEs 954.2 890.7

07Financial Statements

Annual Report 2006

28

Financial Statements 2006Consolidated Balance Sheet 30 Consolidated Profit and Loss Account 32


30

Consolidated Balance Sheet

at 31 December 2006

07Assets 31.12.2006 31.12.2005

g g g Tg

A. NON-CURRENT ASSETS

I. Intangible assets

1. Licenses and similar rights 642,906.64 755

II. Tangible assets

1. Land, titles to land and buildings,

including buildings on non-owned land 18,823,165.40 15,961

2. Property, plant and equipment 21,670,742.42 20,617

3. Other equipment, furniture & fixtures 3,541,776.61 3,817

4. Prepayments and plant under construction 556,629.19 469

44,592,313.62 40,864

III. Financial assets

1. Shares in affiliated companies 0.00 14

2. Equity holdings 40,525.13 41

3. Long-term financial investments 9,912,760.78 9,994

9,953,285.91 10,049

55,188,506.17 51,668

B. CURRENT ASSETS

I. Inventories

1. Raw materials and supplies 9,091.82 337

2. Unfinished goods 0.00 119

3. Finished goods 526,420.05 262

4. Accrued income 7,284,587.86 7,644

7,820,099.73 8,362

II. Receivables and other assets

1. Accounts receivable - trade 17,166,111.03 16,745

2. Accounts receivable - Group 0.00 514

3. Other accounts receivable and assets 5,086,560.30 3,692

22,252,671.33 20,951

III. Cash and cash balances 12,493,942.67 20,986

42,566,713.73 50,299

C. PREPAYMENTS AND ACCRUED INCOME 2,803,557.60 3,063

Total assets 100,558,777.50 105,030

� Annual Report 2006


Equity and liabilities 31.12.2006 31.12.2005

g g g Tg

A. EQUITY

I. Share capital 470,920.12 471

II. Capital reserves

1. Restricted (in accordance with § 13 of the Articles of Incorporation) 27,786,483.68 27,604

2. Non-restricted 9,549,467.67 9,234

37,335,951.35 36,838

III. Revenue reserves 1,468,677.61 2,422

IV. Reserves from investment grants 7,354,678.46 7,012

V. Accumulated result -6,037,284.56 -2,027

of which carried forward e -2,027,313.87 (2005 Te -3,235)

VI Minority interests 34,178,89 48

40,627,121.87 44,764

B. PROVISIONS

1. Provisions for severance payments 8,401,774.81 8,897

2. Provisions for pensions 1,930,356.00 1,957

3. Provisions for taxes 437,535.51 434

4. Other provisions 19,454,830.52 14,667

30,224,496.84 25,955

C. LIABILITIES

1. Prepayments received – trade 726,155.03 694

2. Prepayments received - Nationalstiftung 3,383,788.27 0

3. Accounts payable - trade 8,913,635.12 10,428

4. Accounts payable - Group 34,985.44 0

5. Other liabilities 11,126,359.68 17,085

of which for taxes e 462,462.63 (2005: Te 314)

of which for social security contributions

e 1,354,451.11 (2005: Te 1,419)

24,184,923.54 28,207

D. ACCRUED EXPENSES AND DEFERRED INCOME

5,522,235.25 6,104

Total equity and liabilities 100,558,777.50 105,030

CONTINGENT LIABILITIES 441,817.44 629

07


2006 2005

g g Tg Tg

1. Revenues 40,249,251.80 37,233

2. Subsidies, research grants

and Nuclear Engineering financing 69,779,317.43 60,610

a) Subsidies 13,871,374.66 16,572

b) Research grants 50,969,394.36 39,082

c) Nuclear Engineering financing 4,938,548.41 4,956

3. Change in inventories of finished goods and

services not yet invoiced 4,635,229.16 6,387

4. Other own work capitalised 24,130.33 1,533

5. Other operating income

a) Income from the disposal of assets 0.00 5

excluding financial assets

b) Income from the reversal of provisions 658,310.89 4,044

c) Income from the reversal of extraordinary items

(restructuring costs - arsenal) 0.00 1,561

d) Other income 2,886,952.35 3,545,263.24 3,278 8,888

6. Cost of materials and

third party manufacturing costs

a) Cost of materials 6,732,861.45 7,973

b) Third party manufacturing costs 24,058,208.74 -30,791,070.19 23,429 -31,402

7. Personnel expenses

a) Wages 238,188.90 138

b) Salaries 51,726,059.50 45,753

c) Severance payments and contributions to

occupational pension funds 2,362,526.56 1,752

d) Pension contributions 1,402,393.49 1,518

e) Legally required social security expenses,

salary-related expenses and

mandatory contributions 12,306,070.82 11,297

f) Other social security expenses 529,428.60 -68,564,667.87 749 -61,207

8. Amortisation of intangible assets and

depreciation of tangible assets -7,338,176.15 -6,749

9. Other operating expenses

a) Taxes (excluding taxes on income) 137,023.26 127

b) Other operating expenses 20,992,453.07 -21,129,476.33 19,927 -20,054

10. Sub-total of Positions 1 to 9 (Operating result) -9,590,198.58 -4,761

Consolidate Profit and Loss Account

For the period 1 January 2006 to 31 December 2006


2006 2005

g g Tg Tg

11. Income from other financial assets

(securities) 416,100.72 410

of which from affiliated companies e 0.00 (2005: e 0.00)

12. Other interest receipts and similar income 280,503.94 503

of which from affiliated companies e 0.00 (2005: e 0.00)

13. Financial investment expenses

a) Revaluations of financial assets 81,339.56 16

b) Other expenses 179,756.87 -261,096.43 0 -16

14. Interest payments and similar expenses -111,642.95 -13

of which affiliated companies e 0.00 (2005: e 0.00)

15. Sub-total of Positions 11 to 14 (Financial result) 323,865.28 884

16. Result on ordinary activities -9,266,333.30 -3,877

17. Income tax expenses -14,063.11 25

18. Net loss for the year -9,280,396.41 -3,852

19. Minority interests 13,342.95 -15

20. Reversal of capital reserves 4,646,498.98 4,227

21. Reversal of reserves for investment subsidies 1,325,312.11 1,154

22. Reversal of revenue reserves 1,193,710.87 1,236

23. Additions to revenue reserves -240,793.49 0

24. Additions to reserves for investment subsidies -1,667,645.70 -1,542

25. Profit / loss for the year -4,009,970.69 1,208

26. Losses carried forward -2,027,313.87 -3,235

27. Consolidated profit / loss -6,037,284.56 -2,027

08ImprintContact Details

Annual Report 2006

34


For further details please contact:

Austrian Research Centers GmbH - ARC

Corporate Communications

Michael H. Hlava

Forschungszentrum Seibersdorf

2444 Seibersdorf, Austria

T: +43 (0)50550-2046, F: +43 (0)50550-2010

[email protected], www.arcs.ac.at

Subject to typographical and printing errors.

This document is an English translation of a German original.

It is provided for information purposes only.

The original German version of the annual report is binding

and authoritative in all cases.

Contact Details

Publisher

Austrian Research Centers GmbH - ARC

Corporate Communications

Forschungszentrum Seibersdorf

2444 Seibersdorf, Austria

[email protected], www.arcs.ac.at

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Imprint

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